Fall 2024 Scholarship: Get Up to $10K for Your Master's Abroad!Tax benefits on child’s education fees.
The Indian government offers tax benefits on child education fees to encourage a higher literacy rate and child education in India.
The tuition fees paid by a parent for their children are excluded from income tax and are subject to various benefits that you can avail of.
Parents can enjoy tax benefits on their child’s education fees and additional deductions that are permitted for the same under section 80C of the Income Tax Act.
Deduction for tuition payments received under section 80C
The tuition fees paid to a university, college, school, or other educational institution may be claimed by parents. Transport and development fees, among other fee components, are not deductible under Section 80C.
Together with the deduction for insurance, provident fund, pension, etc., the maximum deduction for payments made toward tuition fees can be recorded for up to Rs 1.5 lakh in a fiscal year.
Eligibility of tuition fees for Section 80C deductions
People who pay any amount or fees for their children’s education may be eligible for a tax deduction under Section 80C if they meet the requirements listed below:
- Only an individual parent, guardian, or sponsor is qualified for this deduction.
- A limit of 2 children per person is eligible for the deduction. Therefore, a maximum of 4 children’s deductions, or 2 for each parent, may be claimed.
- Every financial year, each parent may deduct up to Rs. 1.50 lakh individually. Please be aware that the parent’s total deductions under Sections 80C, 80CCC, and 80CCD cannot exceed INR 1,50,000.
- Regardless of the class the child attends, a deduction is possible. Even if it is partnered with a foreign university, the institution, college, or university must be located in India.
- Only full-time education programs that have a nursery school, creche, or play school are eligible for the deduction. As an illustration, the amount that the parent pays in April 2021 for the quarter ending in March 2021 will be eligible for a deduction in the fiscal years 2021–22.
- A parent who is divorced or unmarried may also claim tax benefits.
- School costs for an adopted child are also deductible.
Non-eligibility of payments toward tuition fees
- Payments made for development fees, charitable contributions, private coaching centers, or other expenses like mess fees, library fines, or similar payments are not eligible for the deduction.
- Paid tuition for part-time courses is not eligible for the deduction.
- The deduction cannot be used to pay for the education of yourself, your spouse, your brother or sister, your mother or father, or any other relative.
- This deduction does not apply to tuition fees paid to foreign universities that are located outside of India.
Additional School Fees Parents Must Save For
Exemption for hostel and education expenses for children
Employees in India are given the following exemptions*:
- Children’s Education Allowance: Up to two children are eligible for a monthly allowance of ₹100 each.
- Allowance for Hostel Expenditure: ₹300 per month for each child, up to a maximum of 2.
(*Only in cases when expenses are made in India following Section 10(14) of the Income Tax Act.)
The Income Tax Act of many countries offers exemptions for certain expenses related to children’s education and hostel expenditures.
These exemptions aim to alleviate the financial burden on parents while promoting education. Taxpayers can often claim deductions for tuition fees paid for up to two children, and in some cases, for hostel expenses as well.
Specific limits and eligibility criteria vary by jurisdiction. It’s crucial to understand local tax laws, keep proper documentation, and consult tax professionals to ensure you’re accurately availing of these exemptions within legal boundaries.
Deduction on Tuition Fees under Section 80C
Section 80C of the Income Tax Act in many countries provides taxpayers with the opportunity to claim deductions on specified investments and expenses, including tuition fees.
While section 80C is commonly associated with investments like Provident Fund contributions and life insurance premiums, it also includes deductions for tuition fees paid for the education of children.
Taxpayers can claim deductions for tuition fees paid to educational institutions for up to two children. The deduction is available for full-time education, including any fees paid for play school, primary school, secondary school, and higher education courses.
However, the deduction does not extend to coaching classes, development fees, donations, or other similar expenses. It’s important to note that the tuition fee deduction under section 80C is part of an overall limit, which can vary by jurisdiction.
Taxpayers need to be mindful of this limit and any other deductions they claim under section 80C. To avail of this deduction, individuals should ensure that they have proper receipts or evidence of payment from the educational institution.
This documentation is crucial in case of any scrutiny by tax authorities. While claiming deductions can help reduce taxable income and the overall tax liability, it’s recommended to thoroughly understand the provisions of section 80C and other relevant tax laws.
Consulting a tax professional or financial advisor can provide guidance tailored to individual circumstances and ensure compliance with legal requirements.
Eligibility for Tuition Fee Deduction under Section 80C:
To be eligible for the tuition fee deduction under Section 80C, taxpayers must fulfill certain criteria:
- Parent-Child Relationship: The deduction is applicable to individual taxpayers who are parents or legal guardians of the child for whom the tuition fees are being paid.
- Full-Time Education: The deduction is available for tuition fees paid for the full-time education of up to two children. This includes expenses for education from play school to higher education courses.
- Recognized Institutions: The tuition fees must be paid to a recognized educational institution, whether in India or abroad. This typically includes schools, colleges, universities, and educational boards.
- Restricted to Tuition Fees: The deduction is specifically for tuition fees and does not cover other expenses such as development fees, transport charges, or hostel fees.
- Total Deduction Limit: The tuition fee deduction falls within the overall limit of deductions allowed under section 80C, which can vary by jurisdiction.
Taxpayers should ensure that they retain proper documentation such as fee receipts, admission letters, and any other relevant proof of payment.
This documentation is essential in case of any tax assessment or audit. Before claiming the deduction, it’s advisable to understand the provisions of section 80C and consult a tax professional or financial advisor to ensure accurate compliance with tax regulations.
Non-eligibility for Tuition Fees Deduction under Section 80C:
While Section 80C offers a deduction for tuition fees, there are certain situations where taxpayers might not be eligible to claim this benefit:
- Not a Parent or Legal Guardian: Taxpayers who are not parents or legal guardians of the student for whom the tuition fees are being paid cannot claim this deduction.
- Other Expenses: The deduction is specifically meant for tuition fees and does not cover expenses like development fees, transport charges, or hostel fees.
- Not Recognized Institutions: If the tuition fees are paid to an institution that is not recognized as an educational institution by relevant authorities, the deduction may not be applicable.
- Part-Time Education: The deduction is applicable only for full-time education. Part-time courses or self-study programs are generally not covered.
- Exceeding Limit: The tuition fee deduction is part of the overall limit of deductions under section 80C. If the total of all deductions under this section exceeds the prescribed limit, the taxpayer may not be able to claim the full deduction.
It’s essential to thoroughly understand the eligibility criteria and limitations of section 80C before claiming any deductions.
Consulting a tax professional or financial advisor can provide accurate guidance based on individual circumstances and help ensure proper compliance with tax laws.
How to claim tax exemption for Children’s education allowance and tuition fee deductions?
To claim tax exemptions for Children’s Education Allowance and tuition fee deductions, follow these steps:
- Collect Documentation: Gather receipts, fee payment proofs, and any necessary documents from the educational institution for both allowances and tuition fee payments.
- Calculate Eligibility: Determine the eligible amount for Children’s Education Allowance and tuition fee deductions based on the relevant tax laws and your expenses.
- Fill in the Income Tax Return (ITR): While filing your ITR, look for sections related to these deductions. In some jurisdictions, Children’s Education Allowance might be under “Other Allowances” and tuition fee deductions under “Deductions.”
- Enter Details: Provide accurate details of the expenses, allowances, and deductions as required in the ITR form. Double-check the information to ensure accuracy.
- Attach Documents: Attach supporting documents like fee receipts and proofs along with your ITR filing. Many jurisdictions allow for electronic submission of documents.
- Review and Submit: Review your ITR form to make sure all information is correct. Submit the ITR with the attached documents through the designated online portal or via your tax consultant.
- Keep Records: Maintain copies of all submitted documents and ITR for future reference in case of any audit or inquiries.
Remember, tax laws and procedures can vary by jurisdiction. It’s advisable to consult a tax professional or refer to the official tax authority website for specific guidelines and regulations relevant to your region.
How to claim the tax benefits on your child’s education fees?
Parents can submit the school’s receipt for the fee paid throughout the fiscal year to their employer. Before filing the investment proofs at the close of the financial year, parents must additionally demonstrate it in form 12BB.
You must prove the number of fees paid under section 80C on the income tax return to claim the deduction for a person who is not a salaried employee under the VI-A schedule.
The children’s education allowance, which is a part of the wage structure, and the fees paid for the children’s tuition are both separate deductions, it is vital to note this.
As a result, these may be claimed individually up to the permitted maximum (given above) by the rules of the Indian Income Tax Act, 1961.
You should utilize these tax benefits to reduce the cost of your children’s education and lower your overall tax burden.
By taking advantage of these exemptions, you can lower your tax liability and use the money you save to invest further and create a fund for your children’s higher education.
Therefore, as a way of increasing literacy rate and awareness, the Indian government has provided an opportunity for everyone to educate our children by exempting parents from paying taxes when it comes to our children’s tuition fees, but of course, it has its limitations.
This is an attempt at national development and for us to reach new successes and explore what we can do with education.
FAQs
Can an unmarried person claim a deduction u/s 80C of the Income Tax Act, 1961 for school fees paid for 2 children?
Yes, taxpayers can enjoy tax benefits on their child’s education fees and additional deductions that are permitted for the same under section 80C of the Income Tax Act.
Is school fees eligible for an 80C deduction?
Yes, school fees are eligible for tax benefits under Section 80C deduction. The amount of tax benefit is within the overall limit of the section of Rs 1.5 lakh a year.
Can we get tax exemption on school fees?
Yes, school fees are eligible for tax exemption under Section 80C deduction. The amount of tax benefit is within the overall limit of the section of Rs 1.5 lakh a year.
How much I can claim for tuition fees?
The amount of tax benefit is within the overall limit of the section of Rs 1.5 lakh a year.
How do I fill my tuition fee in ITR?
Salaried employees need Form 12BB to claim tax deductions for tuition expenses along with the necessary documents in support of the declaration. Self-employed or non-salaried professionals can claim tax benefits under Section 6 of the Income Tax Return (ITR) form.
Can I claim a deduction u/s 80C of the Income Tax Act, 1961 for my adopted child’s school fees?
Yes, it is possible to claim a deduction for adopted kids as well under Section 80c of the Income Tax Act.
Can I claim a deduction under section 80C for tuition fees paid to an Indian institution for my wife’s education?
No, you cannot claim a school fees deduction for your spouse under section 80c of the Income Tax Act.
I and my wife both paid for the education of our one child. My wife paid 70,000 and I paid 1,10,000/- can we both claim a deduction?
Yes, both parents can claim a deduction on your income tax return for the amount you paid.
I am a working woman and I am paying the education fees for my husband’s education. Can I claim the deduction for this?
No, it is not possible to claim a deduction for your husband’s education fees under section 80c.
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10 Benefits of Studying in Canada!
What is the appeal of studying in Canada? In the last 8-9 years, Canada has steadily grown in social standing as the desired location for higher education. It ranks among the most popular destinations for Indian students. Indians make up 41% of Canada's international student body and our the largest student group in the country.
Quality education, graduate assistantships, and many government policies regarding immigration are some of the reasons why you should consider Canada for your child’s higher education.
For students who are seeking programs that are cost-effective and shorter in duration, allowing them to cut down on living expenses, Canada has the most acceptable community education system in the world.
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Major Benefits of Studying in Canada
1. Academic Skills
Education is a federal responsibility, regional governments ensure that the standard of education is uniformly high across Canada, no matter what kind of institution - college/university.
Regarding educational streams, all types of programs from different strands are accessible in Canadian academic institutions.
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2. Developmental skills
Co-operative work is a wonderful concept in Canada that supports students with employment options in their related sectors while attending university. As a result, an engineering student is granted the chance to participate in work for an engineering firm while studying.
This gears up students for actuality by exposing them to a work situation early and instills professionalism with skill development.
3. Quality of life
Canada has repeatedly been graded as being among the world's safest countries. The Global Peace Index ranked Canada as the sixth most peaceful place in the world in 2018. International students enjoy the same entitlement as any other Canadian student.
Standard of living also refers to necessities of life such as atmospheric air, safe drinking water, the feeling of space, and so on, as well as other life-related factors such as significant exposure to the best health care services, and strong educational infrastructural facilities.
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4. Cultural diversity
Canada is a friendly and accepting community. Individuals from different countries of the world have been planning to migrate to Canada for a long time.
This gives Canada a competitive advantage in terms of diverse cultures. Canadians respect other cultures and see them as a symbol of motivation and strength.
Students can enjoy festivals of all racial backgrounds year-round, and the best part is that the festivities are not confined to the ethnic community. Still, the rest of the country embraces all festive celebrations.
5. Immigration opportunity
Since overseas students spend much time in Canada, they will become potential Canadians. They are given adequate opportunity to comprehend and adopt Canadian culture while studying and up to three years to recognize Canadian work culture.
What it ends up in is likely to be prospering once the studies are completed. Indian students are opting for Canada for their university education, and interest in Canada is growing significantly yearly.
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The number of Canadian college graduates between 2000 and 2019
From 2000 to 2019, the number of university graduates in Canada increased
Number of postsecondary graduates in Canada in 2019, segmented by degree type
Better paying jobs for children of Canadian immigrants
According to a Statistics Canada report, the children of economic immigrants attend school longer and have higher-paying jobs than the typical Canadian-born employee.
By the age of 30, the children of economic immigrants in Canada earn more than the average Canadian worker by 29.3%, commanding a median annual wage of $55,500 versus the $42,940 made by the average Canadian employee of the same age.
Economic immigrants' children can command higher wages because they attend college or university at a higher rate than Canadians.
International students in Canada
International students enrolling in formal education increased from 142,170 in 2010/2011 to 388,782 in 2019/2020 in just ten years. As a result, by 2019/2020, the amount of international enrolled students improved from 7.2 percent to 17.8 percent.
Within ten years, one out of every ten international students arrived in Canada in 2000 or became a landed immigrant. As a result, new ideas are being inspired, innovation is being boosted, and people-to-people relationships are being strengthened, all of which are important for international commerce and worldwide trade.
The number of international students intending to study at the secondary and primary school levels has been declining in recent years. Meanwhile, that has been countered by an increase in the percentage of individuals planning to study for a college or master's degree.
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More Advantages of Studying in Canada
1. Affordable and Quality Education
Compared to other options such as the US and the UK, Canada offers a highly affordable and quality education for its students.
Education fees may differ depending on your chosen university, but you can still save a lot of money while studying in Canada.
These universities and colleges offer high-quality academic programs and research opportunities and are consistently ranked among the top global institutions.
2. Cost of Living
A single person's monthly cost is approx Rs. 83,307.6 (1,347.1C$) excluding rent.
Most institutions offer courses with tuition fees starting from CAD 15,000 (Rs. 9,03,999). The cost of living for a single student is around 880 CAD (Rs. 53,034) per month. Monthly expenses including rent are approx $1,708 per month per person and $3,911 for a family of four.
If we count accommodation, food, clothing, groceries, health, transportation, entertainment, travel, etc., a student will require approx Rs. 9,00,000 to Rs, 22,00,000 to cover all expenses. (CAD 18,340 approx).
To counter this, students can apply for an International Student Identification Card upon their arrival in Canada. This provides many benefits to the global student community such as discounts for shopping, culture, food, access to student services and facilities internationally, etc.
It helps prove your student status in over 130 countries since it is the only internationally recognized proof of full-time student status endorsed by UNESCO.
3. Standard of Living
After reading about the cost of living in Canada, you might say it is expensive, however, the standard of living here makes it all worth it.
High-quality education, lucrative job opportunities, cultural diversity, and accessibility of public services on par with its own citizens make Canada one of the countries with a high standard of living.
4. Safety and Security
Canada takes its student safety very seriously, particularly for international students. Students living on campus have a 24-hour security measure in place for them.
Canadian citizens on the other hand are warm and welcoming and respect diverse cultures making these students feel comfortable in their home country. There are many safe options for student accommodation outside the campus as well.
5. Work opportunities for students
The study permit in Canada allows international students to work up to 20 hours/ week, which helps them supplement their income.
Apart from the opportunity to earn extra income, students also get to experience the professional environment of working in Canada.
However, be mindful of not violating the terms of this study permit which can lead to loss of student status and permission to work in the future.
6. Job Opportunities
Canada provides a Post Graduate Work Permit (PGWP) to its international students which allows them to work for up to 3 years after the completion of their course.
However, a PGWP is issued only if you have graduated from a Designated Learning Institute. Also not all Designated Learning Institutes and programs of study make you eligible for PGWP.
There are several other criteria you need to fulfill. Go through them carefully then make an informed decision. Several immigration policies also allow students to apply for permanent residency and work while they study.
FAQs
How much does it cost to study in Canada?
The cost of studying in Canada depends on your chosen institution, your type of education/ course, as well as your living expenses.
However, the cost would be approximately CAD 36,000 (INR 22,00,000) a year for international undergraduate students and CAD 21,100 (INR 13,04,434) a year for international graduate students.
Is it safe for female students to study in Canada?
According to the Canadian Bureau of International Education (CBIE) annual international student survey of 2021, 79.2% of respondents consider Canada to be a safe and stable country.
Plus, the on-campus 24-hour security measure allows you to be tension-free regarding the safety of your child. So, yes it is safe for girl students.
Which are the best places to study in Canada?
Montreal, Toronto, Vancouver, Ontario, and Quebec City are some of the best places to study and work in Canada. These places also offer several part-time job opportunities for international students.
What is a Letter of Intent (LOI) and do I need to submit it to study in Canada?
A Letter of Intent is a document that states your reasons for studying in Canada, your professional and academic goals, and your past qualifications in your home country.
Yes, you need to submit the LOI to acquire a study permit in Canada.
Can students work while studying in Canada?
Yes, the study permit in Canada allows you to work for 20 hours/ week. You have to be careful not to violate the terms of the study permit.
One of the main reasons students like to study in Canada is the high quality of education. Many Canadian universities offer cutting-edge innovative exploration and new technologies.
Canadian universities typically hold the highest international rankings and offer amazing placements and a chance to live in the world’s most peaceful cities in the world.
Hence, considering Canada for your child's higher education is a good choice.
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10 Reasons Why You Should Study in the USA
The USA has emerged as a top destination for ambitious students, and for good reason! This blog explores ten compelling reasons why studying in the USA can be a transformative journey, opening doors to academic excellence, personal growth, and a bright future.
1. World-Class Education: The USA boasts some of the world's most prestigious universities, renowned for their exceptional faculty and rigorous academics. You'll find innovative programs designed to challenge and inspire across diverse disciplines, from engineering and medicine to humanities and business. Many universities prioritize cutting-edge research, offering students the opportunity to learn alongside leading minds in their fields.
2. Globally Recognized Degrees: A US degree is a passport to success. Recognized and respected by employers worldwide, a US education equips you with valuable knowledge and skills that will set you apart in the global job market. Whether you seek a career in India or internationally, a US degree opens doors to exciting opportunities.
3. Flexible Education System: Unlike rigid educational structures, US universities offer a refreshing level of flexibility. The credit system allows you to tailor your studies, choosing courses that align with your interests and career goals. This freedom to explore different fields before specializing allows you to discover your true passion.
4. Diverse and Inclusive Environment: US campuses are a melting pot of cultures, fostering a vibrant and inclusive learning environment. You'll have the opportunity to learn alongside international peers, broadening your perspective and developing valuable intercultural communication skills. This diverse environment prepares you to thrive in an increasingly globalized world.
5. Practical Learning Opportunities: US universities go beyond theory, offering a wealth of practical learning experiences. Internships, co-ops, and hands-on projects allow you to apply your knowledge in real-world settings. This practical experience enhances your resume and makes you a more competitive candidate for future jobs.
6. Cutting-Edge Technology and Resources: US universities are at the forefront of technological innovation. State-of-the-art facilities, advanced research labs, and access to cutting-edge software and equipment provide an unparalleled learning environment. Imagine conducting research in world-class facilities and having access to the latest technological advancements in your field!
7. Development of Life Skills: A US education is more than just academics. Universities cultivate essential life skills, fostering independence, critical thinking, and strong communication abilities. You'll learn to manage your time effectively, collaborate with diverse teams, and express yourself confidently. This holistic approach empowers you to succeed not just in academia, but also in your personal and professional life.
8. Vibrant Campus Life: Step beyond the classroom and immerse yourself in the rich tapestry of campus life. US universities offer a vast array of clubs, organizations, events, and activities catering to every interest. From sports and cultural clubs to student government and academic societies, you'll find opportunities to explore your passions, make lifelong friends, and contribute to a dynamic campus culture.
9. Scholarship and Financial Aid Options: Don't let financial concerns hold you back! Many US universities offer scholarships and financial aid programs specifically for international students. EduFund's expert advisors can help you navigate the financial aid process and explore scholarship opportunities to make your dream of studying in the USA a reality.
10. Post-Graduation Prospects: The Optional Practical Training (OPT) program allows international students to gain valuable work experience in the USA after graduation. This practical experience can strengthen your resume and enhance your career prospects. For some students, OPT can even lead to exciting job opportunities in the US after graduation.
Wondering about how to finance your US education? Join our WhatsApp Community to know more!
Embrace Your American Dream!
Studying in the USA is an investment in your future, offering academic excellence, personal growth, and a chance to build a successful career. At EduFund, we're here to support you every step of the way. Contact our advisors today to explore your options and turn your dream of studying in the USA into a reality!
11 reasons to study in Australia
Australia, the land of incredible opportunities and job scopes is known for its top-class educational facilities.
It is an excellent choice for international students who want to study abroad and gain vocational and technical education innovatively and effectively.
There are several reasons why children who study in Australia have found the experience academically and emotionally rewarding. Let us go through some of them.
Get an education loan for Australia at just 9.85%!
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Important reasons to study in Australia
1. World-class institutions
Out of the top 100 global universities, the best-known six, including the University of Sydney and the University of Melbourne, are located in Australia.
The world-class institutions offer international standards of education in fields like technology, finance, medicine, accounting, engineering, etc.
The technologically-advanced classrooms, impeccable lectures, outstanding training facilities, and extensive support services are a magnet for international students who aspire to study abroad.
2. Teaching and learning process
Parents should send their children to study in Australia because of a unique education system that supports innovative teaching and advanced learning programs.
The strategies encourage students to become critical thinkers so that they can easily achieve their personal and professional dreams later on.
3. Globally-recognized programs
The degree programs offered by Australian universities are authorized by the Australian Qualification Framework (AQF) and accepted by national and international agencies adding high value to the acquired qualification.
4. Affordability
Both the college fees and the cost of living in Australia are affordable if someone has planned their finances well. The government also offers different earning opportunities to students that prove an immense help in meeting daily expenses successfully.
Additional read: Fund your child's master's in Ireland
5. Scholarships
Lots of students want to study abroad but are unable to do as it is an expensive affair. In Australia, almost 300 million dollars worth of student scholarships are for grabs every year.
If your child is one of the lucky ones who has managed to win a scholarship for higher education then they are up for a winning ride.
The Edufund App has a dedicated team of experts who provide support for children’s overseas education. They counsel students and their parents so that it becomes possible to apply for scholarships and make their dreams true.
6. Advanced research opportunities
Australia offers advanced country-based research opportunities to learners who want to boost their careers with help of research and development.
Several universities spend a significant budget on R&D to ensure progress in different fields. They also offer fellowships to interested students to undertake research in their area of choice.
7. Easy access to student visas
One of the major reasons why students prefer to study in Australia is because of the easy accessibility to a student visa. The process is simple and quick for applicants who have their health insurance and finances in order.
8. Gain work experience and earning opportunities along with studies
Students in Australia are allowed to work 40 hours every two weeks or 20 hours every week during the semester and full-time during the semester break.
This is a golden opportunity for students who want to gain work experience and earning opportunities along with their studies.
The minimum wage for part-time jobs is 17 dollars per hour and this earning opportunity is a blessing in disguise for students struggling to meet their financial needs.
8. Multi-cultural society
Australia boasts of a multicultural society that promotes cultural diversity. This place is a boon for international students with diversified backgrounds who can easily find familiar people within the communities.
9. Safe environment
According to the UN’s World Happiness Report, Australia is among the top 10 safe and happy places in the world.
The government has a strong infrastructure in place that provides security and safety to all its citizens including domestic and international students all over the country.
10. Student support system
The Australian government has an excellent student support system in place that provides help to international students facing any issues.
The Federal Department of Education in Australia operates an easy-to-contact helpline that offers help to students with issues related to safety, accommodation, education or work, etc.
11. Numerous employment opportunities
The career-focused programs offered by Australian universities offer extensive knowledge in different subjects. The diverse curriculum empowers students with the necessary skills to face challenges in the outside world and gain employment opportunities.
https://www.youtube.com/watch?v=TNVvKy460dQ
Conclusion
Australia has proved itself as one of the most welcoming education providers in the global arena.
International students who study in Australia are attracted because of the interactive learning environment, globally-acclaimed universities, affordable educational programs, and scenic attractions.
Moreover, the country is known to open new doors of opportunities that promote personal and professional growth.
Consult an expert advisor to get the right plan
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4 essential tips on investing in your child's education
Life becomes easier and more manageable with planning. A very important part of a happy and balanced life is managing your finances well.
This responsibility becomes manifold if you have a family to provide for. Prioritizing the prior planning of your child’s college education can make your retirement life effortless and stress-free.
Put away savings to preserve wealth. Invest money to generate more wealth. At the end of the day, gaining that fine balance between your savings, investments, and spending habits is what will secure a beautiful future for you as well as your family.
Here are some pro tips on how to invest and save for your children’s college education.
1. When to start?
Timing is everything. The logic is simple - the earlier you start, the more wealth you can generate and accumulate.
You may begin as early as the family planning stage itself. Even if you do not have a clear sight of the stream of academics your child might pursue later in life, it does not hurt to put away money.
As your child grows up, they might decide upon what line of academics they want depending on their career goals.
Your savings will come in handy in reassuring your child that you are perfectly prepared to back them in realizing their dreams as there will already be a considerable amount of funds they can count on.
2. Compartmentalise your savings
The habit of saving money regularly is one of the healthiest habits one can inculcate. But mastering the art of saving requires self-regulation and a sense of organization.
Putting away a bulk of money indiscriminately is not the most effective way of saving.
Keep track of your expenses and your income; device upon an amount you can afford to put away as savings. Make a list of all the things you need to save for - emergencies, education, health, housing, and so on. Divide your savings accordingly.
The act of compartmentalizing savings can also be effective in regulating your spending habits. You can also inculcate this healthy habit in your child from an early age by encouraging them to save money from their monthly allowances.
3. Consider different investment options
Investing is always an improvement upon saving because investments can generate new wealth. Thus, it is not enough to just put away money as savings; you also need to allocate funds to certain investments that suit your monetary goals.
There are different kinds of investment channels you can opt for. Some of us prefer fixed or recurring deposits while others want to generate more returns and go for mutual funds.
Mutual funds can be of different types depending on the factors like the amount of risk, duration, return rates, etc.
The mode of payment can also vary. For example, you can go for a one-time investment or you can choose monthly SIPs. Be well aware of all kinds of investment plans available so that you can choose the best one for yourself.
4. Invest in a global education
Your savings and money made from investments will be especially useful when you send your child abroad to pursue a college education.
Even if you are not sure about the possibility of global education in the future, it is always advisable to remain prepared for the same.
Simply saving money is not enough. Investing is a better idea and in the case of global education, it can be beneficial to invest in foreign stocks.
This is because the value of the Indian currency is forecasted to fall in comparison to other stable currencies in the world.
This means that the cost of living and studying abroad will be way higher than the cost of living and studying in a new city within India.
Once you set your financial goals, find out about investment schemes with international equity funds from countries like the US, so that you can make money in a more stable currency.
Conclusion
There can be several investment goals relating to different parts of your life like yourself, your spouse, relatives, housing and accommodation, health, gadgets, and emergencies. Mixing these up will only cause chaos and distress.
Hence, it is important to think separately about saving for your children’s college education and indulge in smart investments.
Consult an expert advisor to get the right plan
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4 Reasons why you should have an EduFund
Why should you have an education fund dedicated to your child’s college education?
Don’t you already have to worry about saving up for your home, your retirement, and any other emergency that may arise? With all these goals it might look daunting to have another fund for education as well.
Is it such a big deal?
Well yes, It is a very big deal!
Here are the top 4 reasons why you need to start saving up for education, as soon as you can, even if your child is just 4 years old!
1. The cost of education will most likely jump (a lot!)
education-cost-jump
In India, the cost of education is increasing at a rate far higher than the inflation rate. According to a report by the National Sample Survey Office (NSSO) - between 2008 and 2014, the average annual private expenditure for general education (primary level to post graduation and above) shot up by a staggering 175 percent while during the same period, the annual cost of professional and technical education increased by 96 percent.
The expenses typically include course fees, books, transportation, coaching, and other related costs. A recent ASSOCHAM survey also reflected this trend - parents are ending up spending almost 50% of their income on children’s education, today.
Studying abroad provides more options to students compared to the highly competitive and increasingly expensive higher education landscape in India.
However, getting admitted into a premier institute abroad requires students to shell out nothing less than a crore/per year, just for tuition fees.
For e.g. Stanford’s tuition fee for its MBA program is USD 140000/year and which is more than one crore, considering the currency rates that are prevalent now.
Even if you factor in an inflation rate of just 10%, it's going to cost double the amount to send your child to college, say 15 years later, than what it costs today.
Whichever destination you might choose to send your child to college, the money that you are going to spend, just on tuition fees, will be very high.
2. To avoid dipping into your retirement corpus!
retirement-corpus
It is more prudent to maintain separate funds for your savings and your child’s education.
This is due to the simple reason that no one is going to give you a loan to take care of your expenses post-retirement.
While your child may get a loan that will fund his/ her education expenses, you need to make sure that you and your spouse, are not dependent on one post your retirement.
Hence, EduFund comes to the rescue!
3. Let your child be debt-free!
Education loans are easily available from banks and other financial institutions and are attractive to many students who are not able to afford higher education – especially abroad.
But then again, education loans are termed at extremely high-interest rates, not to mention the collaterals attached to them. In this scenario, having an education fund will help.
Your child will not start her career with a debt burden hanging over her choice of job. And with the growing uncertainty in jobs due to the current global economic slowdown, there is no job security that assures steady income to pay off an education loan.
4. The Competition is just going to increase!
The competition to get into the best colleges, foreign or Indian, has always been high.
We all know the importance of studying well to get into the best colleges. But the increasing population and increasing enrolment in higher education have ensured that what was possible to achieve with 80% marks in the year 2000, now requires at least 95% marks. And, there are more people competing for the same number of seats.
So, getting into one’s college of choice on merit alone or with a scholarship is going to be much more difficult than it was.
In fact, parents are now having to prepare to handle competition even for KG admissions for toddlers. Many of them start planning right at child-birth on which school their child should go to.
So, start planning now!
When you start early, you have the freedom of choice in college as you don’t have to worry about the cost of college.
Having a corpus fund for education to draw from when the time arises is imperative to ensure a good education and a good career for your child.
And even if your child’s choice of career changes as time passes, you can adapt and be ready with the funds, when required.
FAQs
What is EduFund?
EduFund is an investment app dedicated to helping Indian parents save, invest and plan for their child's education needs.
How can EduFund help you?
EduFund can help you invest, save and plan for your child's education needs. It allows you to customize your plan, and invest in tools like mutual funds, US stocks, ETFs, and digital gold to diversify your investments.
It sets long-term and short-term goals for parents and children to save up time and help them achieve their goals. EduFund also helps you with education loans and connects you with the best loan partners in India and USA.
How can you set up an account with EduFund?
You can download the App from Play Store or apple store and set up your account free of cost. All you need is a bank account, an Aadhar, and a pan card to open your account and start investing in mutual funds.
Conclusion
We live in a world that is marred with competition, whether it's getting into a good college, or choosing the right investment instrument, being prepared for the future equips you to handle things better.
The stability of having a corpus and not being dependent on an education loan is a reassuring move for your child to choose his/ her dream college.
An EduFund may seem a far-off thing today, but it is a necessity for the future.
Plan, invest, and educate!
Invest Now!
4 W’s of Balanced Advantage Funds
What is a Balanced Advantage Fund?
A balanced advantage fund is a fund that can invest 0-100% in the equity market or 0-100% in the debt market dynamically as per the prevailing market condition.
For example - If a fund manager finds that the price of the equity market has gone up, he will tilt the portfolio more toward the debt market.
Likewise, if the equity market trades at a discount, then the fund manager can tilt/shift the portfolio toward the equity market.
The valuation is the internal process of the fund. Based on valuation, the fund manager can take the call. This way, the fund manager can take the opportunity and change the asset allocation.
The fund manager can go aggressive in the equity market or can also decide to play conservatively to reduce the portfolio's volatility. The aim is to minimize the portfolio's downside risk and maximize the returns.
Who should invest?
Investors who are looking for long-term wealth creation.
Investors who are not comfortable with the market volatility.
Investors who do not want to face high volatility and looking for equity-like returns.
Investors who are unsure which type of fund they should invest in, whether in the equity or debt-oriented fund.
Risk-averse equity investors with an investment horizon of more than three years.
Additional read: Financial mistakes to avoid
Why should you invest?
A balanced advantage fund is a dynamically rebalancing fund between two asset classes, i.e. equity and debt.
It has the complete flexibility of rebalancing from 0-100% in both asset classes.
It provides you with better risk-adjusted returns.
It manages the equity market volatility and provides stability in the portfolio by diversifying the portfolio into the debt market.
It offers you equity-like returns, which help your portfolio to grow at a much faster rate than debt funds and also helps you to beat inflation.
Minimizes the downside risk and provides scope for growth by investing in the equity market.
When should you invest?
When the volatility in the equity market increases you do not want to have such high exposure to the prevailing volatility.
When you want equity-like returns but do not want to face high liquidity.
First-time mutual fund investor looking for long-term wealth creation.
Conclusion
Try to allocate some portion of your portfolio towards a balanced advantage fund if you want to reduce the portfolio's volatility. A balanced advantage fund is like a season fund.
FAQs
What is a Balanced Advantage Fund?
A Balanced Advantage Fund can dynamically invest 0-100% in either the equity or debt market, depending on market conditions.
Who should consider investing in Balanced Advantage Funds?
Investors seeking long-term wealth creation, those uncomfortable with market volatility, and those unsure about equity or debt-oriented funds can benefit.
Why invest in Balanced Advantage Funds?
These funds offer flexible asset allocation, better risk-adjusted returns, and stability by diversifying into the debt market. They provide equity-like returns, growth potential, and risk mitigation.
When is the ideal time to invest in Balanced Advantage Funds?
Consider these funds when equity market volatility increases, and you want equity-like returns without excessive risk.
What is the aim of Balanced Advantage Funds?
The aim is to minimize portfolio downside risk, maximize returns, and adapt to market conditions, providing both stability and growth.
5 financial things to consider before child planning.
Both life and wallet will never be the same once you decide to have a baby. No event in your life will signify financial change quite the way this one does, from the first prenatal appointment to the day of college graduation (and beyond).
5 financial things to consider before child planning
1. Create a budget
Before you start child planning, you need to have a budget in place. You and your partner may need to create a realistic budget based on your expenses and your streams of income. Once you know how much you can afford to spend, you will be able to tackle the costs easily.
A new child is a new family member that needs space! So if you need extra space once the baby is born, figure out what kind of home you can afford, whether it's a slightly larger apartment, a warm cottage, or a pricey house.
Will you want the latest baby things or your sister’s passed-on ones? Think about what sort of child care would you require and get candid with your expenses before you start making any purchases.
Money Management Tips for Homemakers
Read More
2. Costs associated with birth
As new parents, you need prenatal vitamins, alternative therapies, labor and delivery alternatives, and screening tests. Give yourself enough time to change or upgrade insurance plans should you need more comprehensive coverage.
Good health insurance is vital in this economy. Hospital bills, medical fees, and maternity costs can be high. According to estimates from the industry, a straightforward delivery could cost between Rs 50,000 and Rs 70,000, but a private specialty hospital could charge up to Rs 2-3 lakh.
A cesarean delivery could result in a cost rise of up to Rs 4-5 lakh. Before having a kid, you should make financial arrangements for the costs associated with the delivery and child care.
3. Consider maternity leave
The vast majority of Indian employees are not entitled to paid family leave. If the mother is employed, you might need to think about taking a lengthier (unpaid) maternity leave or a sabbatical for a year or two. This can be a huge financial loss for families that rely on both streams of income.
Paid parental leave is not always an option. Find out if your workplace offers paid leave for new parents and if there are any policies in your favor that you can utilize.
Determine the number of weeks covered and the proportion of your salary that is used. Do you have to use your sick and vacation days first?
If you don't have access to paid time off or you're going to take more unpaid time off, you might want to cut costs or rely on your savings.
4. Purchase life and health insurance
You'll want your child to be stable financially if something were to happen to you or your partner. A life insurance policy can assist in paying for things like child care, housekeeping, cooking, and more.
Purchasing maternity insurance is the first action you can take to cover maternity costs. When purchasing health insurance, (even for a couple), it is important to confirm that the policy includes coverage for maternity costs and, if applicable, any applicable waiting periods. Additionally, by paying a larger rate, you might add pregnancy coverage to a current insurance policy.
Buying health insurance is most important when considering having a child. Get your health covered in your plan so that you are not financially burdened in case of a health emergency.
5. Plan for the child’s education
Just like the prices of lemons and oranges are growing, the cost of education is skyrocketing. Saving for your child’s college is a necessity. When it comes to saving money for college, time and compound interest are your best friends.
Even while inflation is an unavoidable fact, keep in mind that education inflation is far higher. Utilizing the force of compounding is one approach to combat this, but it will only be effective if you have a long-term strategy in place.
You indeed have no idea what career path your child will take, but you still need to put aside a portion of capital that can be utilized when the time comes.
Right now, you need to think about the type of education you would like to offer because the practical costs of studying engineering in India vs. the US would be very different.
From giving birth to seeing them off to college, watching your child grow and thrive is every parent’s dream! So give those dreams wings by planning ahead and investing for their bright future!
TALK TO AN EXPERT
5 investment plans every parent should have
As parents, we have a profound responsibility to ensure a bright and secure future for our children. While providing love, care, and education are crucial aspects, financial planning plays a pivotal role in setting the stage for their success.
Investing wisely is key to securing their future aspirations and safeguarding against unforeseen circumstances. Let's explore five essential investment plans that every parent should consider, ranging from mutual funds and US ETFs to US stocks and insurance.
So, we will dive in and discover the strategies that can pave the way for your child's financial well-being.
Education Fund: The Power of Mutual Funds
One of the most crucial investments you can make as a parent is in your children's education. Start by setting up an education fund that specifically caters to their academic pursuits.
Consider tax-efficient options like a 529 plan, which allows you to invest in a variety of mutual funds, ensuring growth potential while enjoying tax benefits.
Platforms like EduFund (www.edufund.in) offer valuable guidance and tools to help you plan and manage your child's education fund effectively.
investment plans
US ETFs: Diversification Made Easy
1. Exchange Traded Funds
Exchange-Traded Funds (ETFs) have gained significant popularity in recent years due to their flexibility and global exposure.
Just like mutual funds, ETFs represent a basket of securities, including stocks, bonds, commodities, or a combination thereof. However, unlike mutual funds, ETFs are traded on stock exchanges throughout the trading day at market prices.
ETFs offer several benefits, including transparency, liquidity, and cost-effectiveness. Parents can buy and sell ETFs at any time during market hours, allowing for more flexibility in managing their investments.
Additionally, ETFs disclose their holdings daily, ensuring transparency in the investment portfolio. With generally lower expense ratios compared to mutual funds, ETFs offer a cost-effective investment option for parents.
2. USA Stocks
For parents who are comfortable with taking on more active roles in their investment journey, investing in individual stocks can be an exciting avenue.
Owning shares of well-established companies can offer substantial returns over time. While investing in individual stocks requires careful research and monitoring, it can provide the potential for higher growth compared to mutual funds or ETFs.
EduFund's resources can assist you in understanding stock investing basics and identifying companies with strong fundamentals.
To mitigate risk, parents can consider diversifying their stock portfolios across different sectors and industries. This diversification helps reduce the impact of a single stock's performance on the overall portfolio.
In addition, parents should adopt a long-term investment mindset and focus on the fundamentals of the companies they invest in rather than short-term market fluctuations.
Investment Tips for Dad's in India
Read More
Insurance - Protecting Your Family's Future
Insurance is a pivotal component of any comprehensive financial plan, especially for parents. Life insurance provides financial protection to your family in the event of your untimely demise.
It ensures that your children's education, living expenses, and future aspirations are secure, even in your absence. Term life insurance offers coverage for a specified period, providing a higher coverage amount at an affordable premium.
Additionally, health insurance safeguards against unexpected medical expenses, offering peace of mind during uncertain times. By securing adequate insurance coverage, parents can safeguard their family's financial well-being and ensure a secure future.
Investment Tips for Mom's in India
Read More
Mutual Funds - Diversify and Grow Your Wealth
Mutual funds are an excellent choice for parents seeking diversification in their investment portfolios. These funds pool money from several investors to invest in a variety of asset classes, including stocks, bonds, and money market instruments.
Managed by professional fund managers, mutual funds allow parents to benefit from their expertise and experience in making investment decisions.
By spreading investments across different sectors and markets, mutual funds help reduce the risk associated with investing in individual stocks.
Parents can choose from many types of mutual funds on the basis of their risk appetite and financial goals. For those seeking stability, bond funds can offer a regular income with lower volatility.
On the other hand, equity funds offer an opportunity for capital appreciation through investments in stocks. Balanced funds offer a blend of both equity and bond investments, providing a balanced risk-return profile. By investing in mutual funds, parents can access professional investment management and enjoy the benefits of diversification.
You can lay a strong foundation for your family's future by incorporating these investment plans into your financial strategy.
Remember that investment decisions should align with your risk tolerance, financial goals, and time horizon. It's always suggested as advice to seek guidance from financial advisors who can provide personalized advice based on your specific circumstances.
Conclusion
Investing wisely is an integral part of parental responsibility. By incorporating these five investment plans into your financial strategy, you can take proactive steps toward securing your child's future while also protecting your own financial well-being.
Remember to conduct thorough research, seek professional advice, and regularly review your investment portfolio to adapt to changing circumstances.
By combining long-term vision with disciplined investment practices, you can build a strong financial foundation for your children, allowing them to chase their dreams with confidence.
Start planning today and pave the way for a prosperous future for your family.
Consult an Expert Advisor
5 Reasons why Global Education is the Best for Indian Students
It is universally acknowledged that education is a very powerful weapon. Education can transform an individual and colleges can broaden a child’s horizon. Every child deserves to receive a quality education. There are various reasons why global education is the best for Indian students.
From our experiences, we know that when a student receives a world-class education, it helps them become their best version – professionally and personally.
Pursuing higher education outside of India seems to be promising in more ways than one. In this blog, we will talk about how studying abroad can affect your life for the better. Let's get started.
5 Reasons why Global Education is the best for Indian Students
When you think about it, there are innumerable ways in which a global education can benefit an Indian student. In this article, we will talk about the 5 major ones.
Let's get started.
1. Changes Your Life, for Good!
International exposure to study at a foreign university and the experience of living in a new country can be life-changing! The combined power of both results in gaining practical knowledge that can help you in life immensely.
Living alone in a foreign country can be daunting in the beginning, but it teaches you an immense number of values, and ethics, and not to mention, you become a pro chef!
You learn what is not written in the textbooks. Such experiences also shape your personality and groom you as a responsible professional.
2. Holistic And not just Academic Development
The Indian education system offers academic rigor. However, there still is room for improvement and development.
The cut-offs in premier Indian colleges soar to touch the sky. But whether these colleges provide excellent holistic development is still a big question mark.
Regardless of the foreign country you prefer to study in, most global universities focus on not just academics, but also professional qualifications, leadership, and personal development.
Foreign programs have gained popularity because the faculty is invested in a student's all-around growth.
3. Opens closed doors
Whether it is studying for a master's abroad or a Ph.D. – Foreign universities offer what you commonly don’t find in India.
An array of courses across all fields and subjects like - Artificial Intelligence and Data Security or Criminology, and Media Relations. You name it and they have it.
As per reports released by the USIEF, in 2019, Indians studying in the U.S. made up 17% of the international student population there.
If you want to take the road less traveled or pursue a career in a highly specialized niche, global education opens closed doors.
4. Brighter Career Prospects
Indian students who have received good foreign education have an edge over others. You wonder why? Recruiters view international experience as an asset.
It is reflective of many things like your skills to compete in a global setting and your ability to adapt to diverse cultures. Global education helps you hone your skills and grow exponentially.
After completing their degree, outstanding students can bag an international job as well.
5. Diversity
They appreciate unique students.
Many top-notch B-schools and other universities seek to promote diversity and inclusion. This means that the admissions team deliberately tries to encourage people from different walks of life to join the classroom. Highly reputed universities welcome meritorious international students.
Some even try to strike a balance in their gender ratio thereby including talented girls and giving them an equal chance to fly.
As the saying goes- "Sometimes the smallest step in the right direction ends up being the biggest step of your life!" Take the first step towards a brighter future. And, live the life of your dreams!
FAQs
Why is global learning important for students?
International exposure gained while studying at a foreign university and the experience of living in a new country can be life-changing!
The combined power of both results in gaining practical knowledge that can help you immensely in life.
What is the value of global learning?
Indian students who have received good foreign education have the edge over others. You wonder why? Recruiters view the international experience as an asset.
It is reflective of many things like your skills to compete in a global setting and your ability to adapt to diverse cultures. International education helps you hone your skills and grow exponentially.
Why foreign education is better than Indian education?
They appreciate unique students. Many top-notch B-schools and other universities seek to promote diversity and inclusion.
This means that the admissions team deliberately encourages people from different walks of life to join the classroom. Highly reputed universities welcome deserving international students.
Why do Indians prefer foreign education?
Indian students prefer foreign education because of many factors. Studying at an international university will give students great exposure in terms of meeting people from different cultures and countries.
It will also create excellent employment opportunities abroad. Having studied at a foreign university will add value to a student’s resume.
Conclusion
These are some of the major reasons why global education molds an individual for the better.
In reality, there are many more points that one can consider. Whether it is the quality of education- or the experiences one attains, education abroad is a stepping stone toward untapped opportunities.
We know many of us are now thinking, "What about the funds required to study abroad?". Well, saving up for higher education is not as hard as you think.
